Can you help me with this question and show me the calculation?

A company is considering the replacement of an old machine with a new machine. The old machine was purchased 3 years ago for $12,000. Additional infonnation relating to these machines is as follows (all cash flows are expressed in nominal terms): Item Market Value (now) Service Life (when purchased) Residual Value in 5 years' time Operating Revenue Depreciation Method Old Machine $6,500 8 years so $1,500 Straight line New Machine $8,000 5 years $1,000 $2,000 Straight line Assume that the incremental operating expenses (before depreciation) of buying the new machine is equal to $0, calculate the net present value of replacing the old machine with the new machine. Company tax rate = 300 0. The real required rate of retum is 7 percent per annum and the anticipated inflation rate is 3 percent per annum.